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Special Levies in Sectional Title Transfers: Who Pays Under Section 3(3) of the STSMA?

Always check the exact wording of the special levy clause in your Offer to Purchase before signing - a single sentence can shift tens of thousands of rands in liability between the seller and the buyer.

Few issues cause more last-minute disputes during a sectional title transfer than an unexpected special levy. Whether the Body Corporate raises a special contribution to waterproof the roof, replace lifts, repaint the building, or install a solar and battery backup system, buyers and sellers frequently disagree over who must foot the bill when a unit is sold mid-project.

To determine whether the seller or the buyer is liable for a special levy, a conveyancing attorney must look at two things: first, the statutory default position under Section 3(3) of the Sectional Titles Schemes Management Act 8 of 2011 (STSMA); and second, whether the parties varied that position in their signed Offer to Purchase (Deed of Sale).

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What Makes a Special Levy Valid? (PMR 21(3)(a))

Unlike ordinary monthly administrative and reserve fund levies (which are approved by the owners at the Annual General Meeting), a special levy is raised by a resolution of the trustees without requiring a vote from the owners. However, trustees do not have unfettered power to raise special levies whenever they please.

In terms of Prescribed Management Rule (PMR) 21(3)(a) of the STSMA Regulations, the trustees may only pass a written resolution to levy members with a special contribution if two strict requirements are met:

1. The expense must be necessary: A special levy cannot be raised for luxury upgrades or non-essential cosmetic improvements (which require member approval at a general meeting). It must be required to cover a necessary expense of the Body Corporate.
2. The expense cannot reasonably be delayed: The expenditure must be urgent enough that it cannot reasonably be delayed until it can be included in the budget for the next financial year and approved at the next AGM.

Under PMR 21(3)(a), the trustees may resolve that the special contribution is payable either in a single lump sum or in such number of monthly instalments as the trustees think fit.

Who Pays a Special Levy on Transfer? The Statutory Default (Section 3(3) of the STSMA)

When the Offer to Purchase is completely silent on special levies, liability is governed by Section 3(2) and Section 3(3) of the STSMA:

• When the liability arises: A special contribution becomes due on the passing of the resolution by the trustees levying the contribution.
• Initial liability: It may be recovered by the Body Corporate from the persons who were owners of units (including holders of Exclusive Use Areas) at the time when the trustee resolution was passed.
• The Section 3(3) Transfer Proviso: Section 3(3) contains a vital proviso governing property transfers: "Provided that upon the change of ownership of a unit, the successor in title becomes liable for the pro rata payment of such contributions from the date of change of ownership."

Worked Example of the Section 3(3) Default Rule

Suppose the trustees pass a valid resolution on 1 March levying a R24,000 special levy per unit, payable in 12 equal monthly instalments of R2,000 from 1 April to 1 March the following year:

• The seller signs an Offer to Purchase in May (which makes no mention of special levies), and registration of transfer in the Deeds Office takes place on 1 August.
• Under the statutory default in Section 3(3) of the STSMA, the seller is liable for the 4 monthly instalments falling due prior to registration (April, May, June, and July = R8,000).
• From the date of registration of transfer on 1 August, the buyer (as successor in title) becomes statutorily liable to the Body Corporate for the remaining 8 monthly instalments falling due from August onwards (R16,000).

How the Offer to Purchase Overrides the Statutory Position

While Section 3(3) regulates who the Body Corporate can legally claim from before and after registration, the buyer and seller are free to contractually allocate responsibility for special levies between themselves in their Offer to Purchase (Deed of Sale).

In South African conveyancing practice, standard estate agency Offers to Purchase frequently modify the Section 3(3) default rule in one of three ways:

1. Clause Type A: Seller Pays All Special Levies Raised Before Date of Sale (Signature)
   • How it works: The contract stipulates that any special levy raised by the trustees prior to the date of signature of the Offer to Purchase remains the sole responsibility of the seller in full, even if the instalments only fall due after registration of transfer. Any special levy raised after the date of signature is for the buyer's account.
   • Why it is popular: It is widely viewed as the fairest compromise. When the buyer inspects the property and makes an offer, the price reflects known conditions. If a special levy was already on the books before the offer was signed, the seller must settle it in full before transfer.
2. Clause Type B: Seller Pays All Special Levies Raised Before Date of Registration of Transfer
   • How it works: The contract states that the seller is liable for the full amount of any special levy raised at any time prior to the date of registration of transfer in the Deeds Office.
   • The risk for sellers: Because the property transfer process takes 2 to 3 months, the trustees might pass an unexpected R50,000 special levy resolution two weeks before registration. Under this clause, the seller must pay the entire R50,000 out of the sale proceeds, even though the buyer will enjoy 100% of the benefit of the capital upgrade after moving in.
3. Clause Type C: Strictly Pro-Rata per Section 3(3) of the STSMA
   • How it works: The contract expressly confirms Section 3(3) of the STSMA, stating that the seller pays all special levy instalments falling due up to the date of registration, and the buyer assumes liability for all instalments falling due after registration.
   • The risk for buyers: If the seller failed to disclose that the unit is subject to an existing R3,500 per month special levy running for the next 24 months, the buyer walks into a heavy monthly financial commitment immediately upon registration.

How Special Levies Affect Section 15B(3) Levy Clearance Certificates

Before a sectional title transfer can be registered in the Deeds Office, the conveyancer must obtain a Section 15B(3) Levy Clearance Certificate from the Body Corporate certifying that all monies due in respect of the unit have been paid or secured.

Managing agents and conveyancers handle special levies during the clearance stage as follows:

• If the Offer to Purchase follows the Section 3(3) pro-rata default: The Body Corporate's clearance figures will only require the seller to pay the special levy instalments up to the expiry date of the clearance certificate. Upon registration, the conveyancer adjusts the pro-rata share between seller and buyer as at the exact date of transfer, and the Body Corporate bills the buyer for future monthly instalments.
• If the Offer to Purchase obliges the seller to settle the full special levy: The conveyancer will retain sufficient funds from the seller's net sale proceeds (or furnish a bank guarantee) to pay the entire outstanding lump-sum balance of the special levy to the Body Corporate on registration, ensuring the buyer takes transfer free of the special levy debt.

As highlighted in the Full Bench High Court ruling in Lee and Another v C.H Body Corporate [2026] ZAGPJHC 1285, a conveyancer must meticulously verify both the underlying trustee resolutions and the clearance payments before signing a Section 15B(3) certificate, as lodging an inaccurate clearance certificate exposes the conveyancer to Legal Practice Council disciplinary action and personal punitive costs.

What if the Seller Fails to Disclose an Pending Special Levy?

Sometimes no formal trustee resolution has been passed by the date the Offer to Purchase is signed, but the seller is well aware (from AGM minutes, trustee circulars, or an SGM notice) that a major special levy is imminent.

• Duty to disclose latent financial defects: Under the Property Practitioners Act 22 of 2019, the mandatory Immovable Property Condition Report signed by the seller requires disclosure of known scheme issues. Furthermore, deliberately concealing knowledge of an imminent major special levy to induce a buyer to purchase can constitute fraudulent non-disclosure, rendering the seller liable even where a standard voetstoots or date-of-resolution clause exists.
• Due diligence checklist for buyers: Before signing an Offer to Purchase a sectional title unit, always ask the estate agent or seller for copies of:
  • The last 2 years of signed Annual Financial Statements of the Body Corporate;
  • The minutes of the most recent Annual General Meeting (AGM) and any Special General Meetings (SGMs);
  • The scheme's 10-year Maintenance, Repair and Replacement Plan (MRRP) to see whether major capital projects are funded in the reserve fund or will require a special levy; and
  • Written confirmation from the managing agent of whether any special levies are currently in force or under consideration by the trustees.

Frequently Asked Questions: Sectional Title Special Levies

• Can trustees raise a special levy without consulting the owners?
  • Yes, provided the expenditure is both necessary and cannot reasonably be delayed until the next AGM budget in terms of Prescribed Management Rule 21(3)(a). If the project is a luxury improvement rather than a necessary repair or maintenance item, the trustees cannot use a special levy resolution and must obtain member approval under PMR 29.
• What is the difference between the Reserve Fund levy and a Special Levy?
  • Every Body Corporate is required by the STSMA to maintain an Administrative Fund (for day-to-day running costs) and a Reserve Fund (for long-term capital maintenance set out in the 10-year maintenance plan). A special levy is only supposed to be raised when an urgent, necessary expense arises that was not budgeted for or exceeds the available Reserve Fund balance.
• How do I challenge an unlawful special levy?
  • If the trustees raise a special levy for an expense that is not necessary or could easily wait until the next AGM, or if the trustee resolution was not properly signed in terms of Management Rule 10(1) (or signed by a conflicted trustee), any unit owner can lodge an application for dispute resolution with the Community Schemes Ombud Service (CSOS) under Section 39 of the CSOS Act to have the special levy declared invalid.

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